Affordable Housing a Tough Sell in Stapleton

Stapleton is big enough for everyone, but after five years, it's having trouble making room for affordable homes.

Last June, Nicoleta Nagel and her three-year-old daughter moved out of their rented apartment in Lowry and into a burgundy-colored condominium in Stapleton. For the 27-year-old Romanian immigrant, the second-story home didn't quite match up with her notion of the American Dream. There was no white picket fence or rolling green lawn, the likes of which she saw on television as a child. And it wasn't as spacious as the newly built home she left behind in Aurora when she divorced her husband, a disappointing American with a growing cocaine habit. But the little three-bedroom place with a balcony would suffice.

Besides, it got her into Stapleton, Denver's new and novel planned community on the site of the city's old airport. Nagel first visited the neighborhood while on a lunch break at a nearby restaurant and knew immediately that she wanted to live there. With rows and rows of new houses, pregnant women strolling down the streets and dogs frolicking in the parks and greenways, she affectionately calls it "Pleasantville."

"Even though I'm poor, I have my own stuck-up ideas of what life should be like," she says.

Unlike most people in Stapleton, however, Nagel lives in an affordable-housing development, an island of have-nots and have-lesses surrounded by homes in the $350,000-to-$650,000 range. Nagel bought hers for $169,900. To qualify for an affordable home — which developers set aside for low-income buyers — she had to prove that she earned 80 percent or less of the median income for families in the Denver area.

Nagel wasn't always strapped for money. She grew up in Bucharest, Romania's capital city, where her parents hired a maid to take care of her. Her mother ran a shelter for homeless youth who slept in the city's subway stations; it later inspired the 2001 Academy Award-nominated documentary Children Underground. Nagel moved to Denver with the help of an American family friend who took an interest in her mother's project. She met the man she would eventually marry a mere ten days after her arrival, while hiking with a church group. The pair wed within two years, and Nagel began work as a legal secretary. When her marriage unraveled, she was left with little income. "I ended up as a stereotypical single American mom out of nowhere," she says, laughing.

Today she works part-time as a paralegal while taking classes toward a political science degree from the University of Colorado Denver. She earns about $1,800 per month, tucking more than half of that into her mortgage, with more going toward car expenses and food. Her ex-husband foots the bill for her daughter's daycare.

In Stapleton, Nagel has followed her mother's activist tracks. She joined a moms' group to pressure the city to build a library. She petitioned Forest City Enterprises, Stapleton's primary developer, to bring more independent businesses to the community. And she keeps a close eye on the development's homeowners' association, making sure that it keeps the grassy areas green and trimmed.

"I think it's a good opportunity," she says of the affordable-housing program. "At least the choice is there. At least the government knows that a woman can't compete with a couple or a single dad. You make it affordable for me and see if I'm embarrassed."

But five years after its inception, the program is still in its infancy. Of the 3,071 homes on site, just 158 of them — or 5 percent — are available to people like Nagel. That's about half of where Forest City should be by now to keep pace with its own affordable-housing plan. In addition, the units that do exist — largely condominiums and duplexes that border the Park Hill neighborhood — have been slow to sell. Nagel's development still has six empty homes.

This has some people wondering how committed Forest City is to attracting economically diverse residents while trying to sell high-priced homes. "I think the profit pressure makes it difficult to stay on task and build affordable for-sale [homes]," says Bill Calhoun, who heads a committee that advises Forest City on affordable housing.

"The case can be made that there is a strong diversity piece," adds Calhoun, who is also a pastor at Montview Boulevard Presbyterian Church. "The case can be made that it should be stronger."

But Forest City officials promise that the community won't fall short of its long-term goal, whether that's achieved now or in the future. And they say they are working to make their product more attractive to potential buyers.

"Any affordable-housing program is not going to fill all your gaps. You do your best to serve where the need is," says Forest City spokesman Tom Gleason. "It makes no sense to build something when there is no market for it. It's a challenge that everyone is facing."

Stapleton is the largest urban-infill project in the United States, and it's one of several that got under way in Denver in the late 1990s and early 2000s. These included Lowry, on the site of the former Air Force base, and Highlands' Garden Village, where the original Elitch Gardens once stood. Another project south of DIA, Green Valley Ranch, while technically not infill, connected other developed areas.

"In a short period of time, all of these opportunities opened up," says Allegra "Happy" Haynes, a former city councilwoman who helped draft Stapleton's plan and who now serves on several of its advisory committees. Each development was an experiment in how to create a new kind of community.

Stapleton, says Haynes, was envisioned as the most "urban" of the fledgling residential districts. Heralded as the answer to sprawling neighborhoods that priced out middle-income workers, it would be the anti-suburb, where apartment complexes would be built next to single-family homes, with restaurants, stores, office buildings and parks within walking distance. The neighborhood would mimic the style and feel of old Denver — a brand-new "Washington Park" could take the place of the runways and terminals of the former Stapleton International Airport.

In 2000, Denver gave Cleveland-based Forest City the contract to develop the 7.5-mile-long tract of land. Little by little, public property was turned over to the company, which subcontracted with several smaller developers. By 2002, a couple of model homes were built, and later that year, the first buyer moved in. When Stapleton is completed in 2020, it is expected to house between 25,000 and 30,000 residents.

Affordable-home ownership, like environmental sustainability, was long part of the vision at Stapleton. The early proposal, drafted by Haynes and other civic and business leaders in a document titled the "Green Book," called for workforce housing to be dispersed throughout the development. At Stapleton, it was hoped, firefighters, police officers, teachers, nurses and other middle-income earners who could no longer afford to buy in central Denver would live alongside the upper-middle class.

As part of its agreement to buy what was once public land, Forest City committed early on to developing affordable housing, and in 2001, it formalized its plan with Denver officials. Of the 8,000 for-sale homes slated for construction, about 10 percent, or 800, are supposed to be "affordable," according to federal housing guidelines. And of the 4,000 anticipated rental units, 20 percent, or around 800, must meet the same standard.

"Affordable" means that people making 80 percent or less of the Area Median Income for Denver, Adams, Arapahoe, Jefferson, Broomfield, Boulder, Elbert, Douglas and Clear Creek counties should be able to buy in. Right now, that standard is around $57,350 for a family of four, $45,900 for a two-person household, and $40,150 for a single person.

Each affordable-home builder in Stapleton sets its own housing prices, but they should hover around a rate established by the city — typically, $165,559 for a three-bedroom home. In order to keep the homes affordable for decades to come, each unit has a thirty-year deed restriction attached to it, meaning its value can rise by around 3 percent per year.

Forest City's affordable-housing plan barely predated Denver's own Inclusionary Housing Ordinance, a 2002 mandate meant to help ease the effect of soaring home costs in the metro area. (In September, the average home price was $305,459.) The ordinance directs developers who build thirty units or more to keep 10 percent of their projects affordable; builders who choose not to do this must pay a fee to the city.

Forest City created its own plan so that it wouldn't have to adhere to the city ordinance, which was still being drafted at the time. But the developer actually follows a stricter code than most around Denver, primarily because it included rental housing, says Susan Barnes-Gelt, the former city councilwoman who authored the city ordinance. "Their requirements were more rigorous than the city's," she says.

And there's no opting out for Forest City. If it doesn't build affordable housing, Denver could stop selling it land for future high-end homes, says Dick Anderson, president of the Stapleton Development Corporation, a nonprofit created by the city to oversee the transformation of the former airport. "If we thought that they were not living up to what they had agreed to, we have that power."

Krista Zweck and her husband, Juan Piceno, purchased a $177,000 condominium in Stapleton three years ago. At the time, they were one of just a few families to buy into the community's first affordable development, a series of tan- and rust-colored homes with communal green areas called Roslyn Court. Over the next several months, homeowners trickled into the adjacent units, and the couple slowly became acquainted with their neighbors. The last condo sold in July, and now Roslyn Court feels like a community, with gossipy neighbors gathering in one corner and children running in the nearby park.

The "stability" of a place like Stapleton, as Zweck puts it, wasn't always an option for the couple. When they met working the night shift in a California Denny's, Piceno, an immigrant from Mexico, didn't yet have legal status in the United States. Zweck had never owned a credit card, and when they moved in together, they paid cash for everything.

One summer, the pair traveled to Colorado to work on Zweck's parents' farm and decided to relocate to Denver for good, eventually buying a two-bedroom condominium near Rose Medical Center.

They got married, and Piceno acquired a green card. Their first child, Violeta, was born in 2000, and by the time Zweck was pregnant with their second, Jolan, the couple decided to move to a larger home. "It was less about us and our eccentricities anymore," she says.

But Zweck, a former waitress, and Piceno, who now drives a truck for a living, knew they couldn't afford a home in Denver, at least not in a safe neighborhood. A friend tipped them off to Stapleton's affordable program, and the couple applied to move into the development by providing pay stubs to a housing consultant. With a combined income of $52,000, they made just enough — but not too much — to qualify for the house.

Just before the couple closed on the home, however, Zweck turned in a pay stub a bit above her average; she'd had a particularly good week for waitressing tips. With the extra money, she was told, they were now making more than the federal standard for affordable housing and no longer qualified. So Zweck quit her job temporarily, and they moved in. "We barely made it," she says. "You can't be over. Not even a penny."

But at $1,400 per month, their mortgage is double what it was in their last home. In addition, they have to pay a fee to their homeowners' association. With 401(k) payments, health insurance and house costs, there's little cash at the end of the month. And now that Piceno's sister and son are temporarily staying in Jolan's bedroom, the unit is crowded.

"'Affordable' is an illusion," Zweck says. "It's not like we're dying, but it's a lot of money every month."

Even so, Zweck, who is in school to become an aesthetician, says she's happy. And though Roslyn Court is sectioned off from the rest of community by streets and a parking lot, she says she doesn't feel isolated from the thousands of other Stapleton residents, some of whom live in million-dollar homes a few blocks away. "It's like the edge of the community," she says, "but I don't feel like people treat us differently."

While Zweck and Piceno bought into Stapleton early on, it took around four years for the community's existing affordable homes to fill up.

Forest City's hurdles to attracting buyers stem, in large part, from a factor that housing experts warn about: not knowing what people want, says Rachel Basye, of the Colorado Housing and Finance Authority, an agency created by the state legislature that encourages affordable-home ownership.

"I think it comes down to understanding the market you are serving and not assuming that if you build something, they will come," she says. "Who is the market of that area? What are people looking for in that area? You should not assume you can build something else."

Lumping the affordable units together was the first mistake, says Jacky Morales-Ferrand, Denver's housing director and a former Forest City employee. In Roslyn Court and in Syracuse Village — where Nagel lives — each deeply discounted home looks identical to the rest, save for the color of the facade. This dearth of variety, both in appearance and cost, can blind a customer to the real value of the home.

"If I am an affordable buyer, I don't have anything else to compare it to," she says, adding that a more successful approach may have been to integrate the affordable units in with the market-rate homes. "I'm not willing to throw myself out there and say that that would solve everything.... I would say that as a matter of policy for the city of Denver, it is our preference to see the units more integrated on a building scale."

This tactic could also have gone a long way toward creating that "sense of community" championed in Stapleton's Green Book.

For David Michael, a consumer credit counselor who moved to Stapleton from California with his wife two months ago, the principle of inclusiveness played a role in his decision to buy there. "We did value that," he says. "We valued it as a spectrum, the idea of different people and populations." But Michael also liked the fact that they could "get something big and new," and he liked its proximity to downtown.

Michael and his wife bought a $500,000 home in Eastbridge, a Stapleton neighborhood that's about two dozen blocks from where Zweck and Nagel live, and he hasn't yet met anyone who lives in Stapleton's small number of low-income homes. "We've very much gotten to know our own neighborhood. They are at the same price point as we are."

Nagel and her neighbors, meanwhile, joke that they have been ghettoized as they chide their homeowners' association for letting the grass die in the common areas. "People say, 'Just because we live in affordable housing doesn't mean we live in the projects,'" she says.

Forest City has no plans to integrate affordable-housing units with its regular housing, but Gleason says the company won't rule it out. "Mixed-income is possible with financing," he says. "A mixed-income high-rise residential building is something that we would look at."

Stapleton's second misstep was to limit the product it offered to attached units, opting not to build single-family homes. Separate houses are typically more expensive to construct, but they are also very popular — especially for first-time homebuyers whose notions of ownership don't necessarily involve apartment-style living.

"If you look at the Stapleton plan, some of the units are on the smaller side," Morales-Ferrand says. "There is some resistance as [buyers] get farther away from the inner-city core to condominium living and smaller units."

Lowry and Green Valley Ranch have built and quickly filled single-family affordable homes, but it took clever financing in one case and low land costs in another. Lowry's secret lies in its community land trust. A homebuyer purchases the actual sticks and bricks of the home but leases the land underneath it from the trust, a non-profit organization set up to ensure the long-term affordability of the unit. The 125 occupied units — some of them townhomes where families live side by side rather than one on top of the other — were cheaper to build and to buy. The trust also allows Lowry more oversight of its affordable program, assisting buyers — all of whom had to take ownership classes — when they are ready to sell.

So far, there hasn't been a foreclosure in Lowry's affordable development; Stapleton, on the other hand, has weathered three.

Green Valley Ranch was able to build low-cost single-family homes simply because the land beneath the development was inexpensive. The community adhered closely to the city's 2002 affordable-housing ordinance, building around 630 detached homes, some of which sold for just $100,000.

Another problem for Stapleton was that, until recently, it didn't aggressively advertise its affordable product. To an outsider, the community might seem more "Pleasantville" than new-urbanist, a wealthy white suburb with little to offer a waitress or a truck driver looking to buy a home.

"When you begin marketing a community of this size, there are a lot of demands for your efforts," says Anderson, of the Stapleton Development Corporation. "You want to hit the marketplace running, and the risks are so great, there is a tendency to focus on the product that the marketplace will absorb. I think Forest City quite naturally did that. But that's why we're here, to remind them of their responsibilities in delivering affordable units."

In recent months, Stapleton has worked to change its image with a series of workshops hosted by American Sunrise Communities, a Santa Monica-based company that specializes in educating potential affordable-home buyers. The conferences have netted six closings since February.

"Forest City has to build affordable housing. Everyone was under the impression that it would sell like hotcakes," says American Sunrise's Janeen Cameron, who fills the workshops by cold-calling area businesses and inviting their employees. "At my conferences, I find that people are shocked that there is affordable housing at Stapleton. It is great that we are here to say, 'Yes. There is affordable housing at Stapleton.'"

Stapleton has also been caught in the recent problems that have plagued the entire housing market nationwide, Cameron adds.

After an avalanche of foreclosures, lenders are shying away from people with poor credit. "I would say 90 percent of the people coming to our conferences have bad credit," she points out. "They don't understand finances. They don't understand how to budget. They don't understand the kind of a down payment they need. We're working with them to understand that. The people who are in that situation, we're helping to get them on the path to home ownership."

Forest City says its biggest challenge to selling affordable homes is the deed restriction, the mechanism attached to each unit that limits appreciation and ensures long-term affordability. Demand is very high for everything else, says Melissa Knott, Forest City's director of housing initiatives. Some regular homes have sold at seven per week, while the affordable program has chugged along at three closings per month.

But housing experts say the deed restriction is the only way to ensure that people looking for a quick buck don't buy cheap and immediately flip the home for a much higher price. "Sometimes it can be a barrier to selling the homes," says Karen Harkin of the Colorado Housing and Finance Authority. But in the current market, "in which properties are not rapidly appreciating, that shouldn't be something that would inhibit the sale of the units," she adds.

Yet Forest City's initial hold-up in its affordable-housing program had less to do with filling the units than simply getting them built.

In 2003, a local developer named Jackie Peterson broke ground on Stapleton's first affordable development, the place where Zweck and Piceno now reside: Roslyn Court. Peterson had built affordable rentals before, but not for-sale homes. Even so, she received a $6.5 million loan from the city. But she underestimated the project's costs and defaulted on a portion of the loan when she was about halfway through. Forest City was left to pick up the pieces, selling the eighty units itself over the next four years.

Since the going was slow, Forest City lowered the price of the units from $176,000 to $164,000 or less for a three-bedroom home. The city also administered federal down payment assistance to some Roslyn Court buyers, giving a single person as much as $22,000 to urge him or her to move in.

"A lot of the people who bought before the money came out are probably pretty upset if they know that other people got that money," says Evan Jansen, a preferred lender in Stapleton's affordable program. "The affordable homes were sitting there. They weren't being sold. They were overpriced for people who were income-qualified to buy them."

Mindy Sunday moved into Roslyn Court just over a year ago, after receiving the full $22,000 down payment grant. Her daughter and son-in-law were one of the first couples to buy a regular Stapleton home, and she decided to relocate from her apartment in the Alamo Placita neighborhood to be closer to her grandchild. Her daughter found her the one-bedroom place for $124,000. "This allows me to be an available grandparent without going broke," says Sunday, who started her own business as a kitchen designer after six years of working for Home Depot. "Do I enjoy living here? I'm getting used to it. This is living in suburbia of sorts, but it's not like the other suburbs I've been to."

But Sunday, who never owned a home before, says affordable living is accompanied by a stigma. Once, at a Christmas party on her daughter's street, a man stopped speaking to her when he learned where she lives. "This is a good financial move and investment," she says. "Did I like it when that guy walked away from me? I'm not used to being discriminated against."

Worse, though, are the problems within Roslyn Court itself. In recent months, residents have complained of thin walls, crumbling balconies, and a concrete base that slopes into the center of the development rather than away from it. They've prompted their homeowners' association to look into a possible lawsuit against the builder. Sunday notices the noises coming through the walls most of all. "If you're in the bathroom, you can hear the toilet paper coming off the roll from the other side of the wall," she says.

Down the street, Syracuse Village also faced initial setbacks. BMW Realty Group — owned by former Denver Broncos Claudie Minor Jr. and Odell Barry, along with an executive named Thomas Williams — was commissioned to build it. But the partners quit a third of the way through when they couldn't find enough potential customers to move forward.

"When we began that process, we understood that there was a list of 1,100 folks that were interested in being at Stapleton," says Minor. "But when we got into the mix of it all, not all of those folks were qualified buyers." In most cases, they made too much money to qualify, he adds.

Forest City's Gleason wouldn't comment on the situation.

BMW Realty sold its property back to Forest City. "You know, Forest City is the 900-pound gorilla. We were little fellows," says Minor, adding that Stapleton's main developer could better afford to build and hold on to empty homes. But construction on Syracuse Village stalled for nine months as Forest City got ready to take over the project. At the same time, some low-income buyers who were prepared to move in were told to wait it out. But many ended up dropping out of the program anyway.

To help get its affordable program back on track, Forest City will change course for an upcoming project called 29th Drive Row Homes by donating land to the developer, New Town Builders.

"Our last estimate was that it was at least a $20 to $30 million subsidy that no one anticipated," says Knott about the cost of donating the land. "Because of our contract with the city, we need to do what we need to do."

But Forest City is looking to 29th Drive as both a referendum on the affordable program and an indicator as to how the market will swing in the next several months. The homes will be located much farther into the development rather than on the edge of Park Hill, and they'll be side-by-side townhomes rather than apartment-style units. Buyers will be able to choose between a few different color schemes for cabinets and countertops before they move in — all in the name of enhancing what it means to be a homeowner. A three-bedroom unit will go for $168,900.

"They're bigger and nicer, and it's going to end up seeming like a real value compared to the first couple of products," says Damon Knop, who sells Stapleton's affordable homes for New Town Builders.

Each building will include six to eight units, but New Town will only construct one or two at a time, testing the market to see whether there's enough interest to construct all nine of the anticipated buildings. Success depends largely on whether qualified buyers will be able to access secure loans. Right now there are twelve potential customers lined up.

"If everyone ends up getting rejected, then that tells us something," Knott says. "If you can't make loans, you can't sell units. In the next thirty days, we'll know if it's true that everything is shut down or that we need to keep a more careful eye on it." If that happens, Forest City may switch its focus to affordable rentals, which tend to fill up quickly.

Whether Stapleton's ideals about inclusiveness mean anything to the average homebuyer — or the affordable one — is another question.

"At the end of the day, people buy their homes on whatever their own criteria are," says former councilwoman Haynes. "We share as much as we can, but do those principles enter into their decision making when they purchase a home or move into a community? Who knows?"

For Nagel, Stapleton's appeal was more than her condo's proximity to million-dollar homes. When she was married and living in Aurora, her husband, high on cocaine, threw her out of the house in the middle of the night. Purchasing a home in Syracuse Village was a way to put down roots, she says. No spouse or landlord can tell her to leave; it's hers, no matter how difficult the payments may be. Later this year, Nagel will receive her U.S. citizenship, another step toward security.

"I think Americans have this obsession. They haven't yet bought their home, and they think of selling it already," she says. "I might be dead tomorrow. Maybe I'll become Princess of Monaco. I have this house, and I'm enjoying it. I know better than to make life plans."

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